Public-sector pay policy a factor in creating modern efficient services

When people read newspaper stories about patients lying for hours on trolleys in hospital corridors, their response is to demand more health-service staff.

Public outrage at the plight of children sleeping in the streets in the biting cold leads to political demands for expanded social services. Concern about bullying in schools manifests itself in calls for a better schools psychological service. And growing waiting lists for driving tests fuel demands to take on more driver-testers.

These examples (and there are scores of others I could use) demonstrate how public-sector pay policy is about more than the pay of individual workers or the demands that this places on the Exchequer. Fundamentally, the debate about public-sector pay is about investment in services highly valued by Irish people.

Of course, careful control of public spending is vital to our overall economic well-being, particularly now that European monetary union has removed monetary policy and interest rates as tools of national economic management. And because public services tend to be labour-intensive, pay will continue to account for a substantial portion of public spending.

But policy cannot rest solely on a desire to control public-sector pay because this book-keeping approach says nothing about the level and quality of services provided. Any private corporation that took such an approach would soon find itself in trouble. Its costs might fall but it would not able to offer its customers anything of value.

The public-sector pay bill is a product of three things: the sum of the widely different wage rates paid to individual public servants; the public-sector pensions bill (although most public servants pay into contributory pension schemes, pensions are paid out of current Government expenditure); and the number of public servants.

Although public-sector pay rates tend to move in line with the private sector over time, the number of public servants has increased over the last decade as politicians of all parties have responded to demands for expanded public services. By far the biggest growth was in health and education.

Despite this growth, the level and range of the State's public services do not match its current economic status. For the most part, our health services, education and infrastructure are still a long way behind the best that Europe has to offer. The Scandinavians and Germans may envy our economic growth, but they would not want to swap health services.

Public-sector pay policy should be seen as one of the tools available to politicians as they work to develop modern, efficient, accountable and responsive public services. Above all, pay policy must help ensure that the public sector continues to recruit its share of the brightest and best, the crucial human resources that are essential to quality public services.

But the rigidities of the public-sector pay system are now doing just the opposite. Senior gardai and health board chiefs are lured into the private sector while senior appointments in the commercial semi-State sector are stalled because of the pay straitjacket. Health boards increasingly advertise social work and other professional posts in the UK because they can't find staff in Ireland. A young science graduate can expect to earn up to £10,000 a year more in industry than in the forensic science laboratory.

Increasingly, ad-hoc measures are being employed to retain key staff. "Loyalty bonuses" are being paid to Civil Service computer staff to keep them in place to deal with the Year 2000 problem. And some Dublin hospitals are so desperately short of staff that job-sharers are being offered overtime rates to work fulltime shifts.

In short, a rigid system is struggling to meet the dual challenge of improving and expanding public services and responding to modern labour market conditions.

And no wonder. The system is based on a 1955 British Royal Commission report on the civil service. The Priestley Commission said public-sector pay should be based on comparison with private-sector workers doing similar jobs. Where these comparisons were not possible, Priestley recommended a system of internal pay relativities, the "links" that politicians and public service managers are so keen to maintain or break, depending on what is currently expedient.

The result is that many public-service groups simply have no existence for pay purposes except through their links to others. To take the simple position that these links must be broken without putting forward a fair and workable alternative is not a policy.

Rather, it is an abandonment of any responsibility for effective human-resources management in the public sector. Because under the existing system, it is simply not credible to believe that some groups can be dealt with in isolation from others.

Similarly, the practice of recruiting staff at the bottom of long incremental scales, with maybe 10 or 15 tiny increments over the same number of years, is looking less and less capable of attracting and retaining the brightest and best.

There are three main reasons for this. First, it is becoming more difficult to recruit dynamic young staff who see a 15-year climb to the top of the scale as desperately unattractive compared to the varied, exciting, and often lucrative opportunities in the private sector.

Second, the system has proved itself incapable of recognising and rewarding enhanced qualifications and skills, often gained by dedicated individuals in their own time and at their own expense. And third, the increment system is based on "satisfactory service" which tends to be interpreted as unblemished rather than outstanding service, rewarding the conformist rather than the entrepreneur.

National agreements have made little headway on these structural flaws. Their "local bargaining" provisions have proved incapable of addressing anomalies in the system without opening a Pandora's box of new claims.

ICTU's Public Services Committee has recently met the Government for exploratory discussions on outstanding public-sector pay issues and the possibility of developing a new system for the future. These talks will require substantial effort and imagination on all sides if the system is to be improved in a way that delivers more and better services while maintaining principles of fairness.

Peter McLoone is chairman of the ICTU Public Services Committee and general secretary of IMPACT, Ireland's largest public-sector trade union

Tomorrow: John Dunne, director- general of IBEC